How Maggi, KitKat supplies didn’t stop during lockdown; why coronavirus failed to hurt Nestle

E-commerce also lent a helping hand to Nestle and drove its growth.

As the FMCG sector struggles to keep up with supply chains and has majorly reported a sales decline barring a few products such as handwashes during the coronavirus lockdown, Nestle India has outshone its peers. The maker of Munch and KitKat range of chocolates has reported a double digit domestic sales increase with its Maggi and chocolates portfolio driving growth. “Nestle’s strong sales growth for the quarter compared with the sales decline of its peers indicates lower impact of lockdown on its efficient supply chain as well as likely benefits stemming from consumer upstocking,” an Emkay Global report said on Wednesday. 

E-commerce also lent a helping hand to Nestle and drove its growth. Earlier, market research firm Nielsen India had said that the coronavirus pandemic will force FMCG companies to re-calibrate their strategies and they will go aggressive on e-commerce in coming months.

Key takeaways from Q1 results

  • As of the Q1CY20, Nestle has reported Rs 33,253 mn in revenues as compared to Rs 31,493 mn in the last quarter of 2019. 
  • The Indian arm of global FMCG company reported a 13.54% jump on-year in consolidated net profit at Rs 525.43 crore for the March quarter, as against Rs 462.74 crore in the same quarter last year.
  • Nestle India’s revenue from operations for the quarter stood at Rs 3,325.27 crore from Rs 3,002.95 crore in the year-ago quarter.
  • The maker of Maggi brand of noodles reported total sales growth at 10.8% during the quarter. Domestic sales growth was at 10.7%
  • Nestle reported profit from operations at 21.7% of total sales.

“Company remained resilient in the first quarter, as the numbers indicate, and delivered volume and mix led growth. Maggi, KitKat and Nestlé Munch delivered strong performances,” Suresh Narayanan, Chairman and Managing Director, Nestle India. However, growth in certain sectors such as out of home portfolios remained subdued. Further, commodity prices for milk and its derivatives were also on the rise during the quarter, he added. 

Meanwhile, Nestle India was trading 3.54% lower than Wednesday’s opening of Rs 17,755 per share at 11:15 AM.

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